Edited version of private advice

Authorisation Number: 1051657922594

Date of advice: 09 April 2020

Ruling

Subject: Goods and services tax and registration of a statutory trustee

Question 1

Is Individual A (you), in his capacity as Trustee for Sale pursuant to a Family Court Order, required to be registered for GST for the sale of a commercial property pursuant to section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, you in your capacity as Trustee for Sale pursuant to a Family Court Order, is required to be registered for GST in relation to the sale of the commercial property.

Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold (currently $75,000 or $150,000 for non-profit bodies).

Enterprise

Applying the principal in Toyama Pty Ltd v Landmark Building Developments Pty Ltd [2006] NSWSC 83 (Toyama), you in your capacity as Trustee for Sale as appointed by the Family Court, are carrying on an enterprise for GST purposes when you undertake activities to meet your duties and obligations in accordance with the Family Court Order as Trustee for Sale of the commercial property.

GST Turnover

Division 188 of the GST Act considers circumstances where your GST turnover meets the registration turnover threshold and what supplies may be disregarded when calculating your projected GST turnover.

Section 188-25 of the GST Act excludes proceeds from the transfers of ownership of capital assets or supplies solely as a consequence of ceasing to carry on an enterprise or substantially and permanently reducing the size or scale of an enterprise from the calculation of GST turnover.

Goods and Services Tax Ruling GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover (GSTR 2001/7) provides the ATO view in relation to GST turnover.

In applying the principals contained in paragraphs 31 to 36 and 38 to 41 of GSTR 2001/7 to your case, we consider that the sale of the commercial property by you in your capacity as Trustee for Sale would not be a transfer of ownership of a capital asset nor would it be a supply solely as a consequence of ceasing to carry on an enterprise or substantially and permanently reducing the size or scale of an enterprise.

The issue in relation to an isolated transaction involving a single asset is considered in paragraphs 46 and 47 of GSTR 2001/7 which provides that an enterprise may consist of an isolated transaction or dealing with a single asset.

As such, the sale of the commercial property does not fall within the exclusions provided for in section 188-25 of the GST Act and the proceeds of the sale will be included in the calculation of your projected GST turnover.

Therefore you, in your role or capacity as Trustee for Sale as appointed by the Family Court Order, will be required to register for GST at a time when your current GST or projected GST turnover is $75,000 or more.

Question 2

Is Individual A (you), in his capacity as Trustee for Sale, liable for GST pursuant to section 9-40 of the GST Act for the sale of the commercial property?

Answer

Yes, you in your capacity as Trustee for Sale, are liable for GST pursuant to section 9-40 of the GST Act for the sale of the commercial property.

Section 9-40 of the GST Act provides that you are liable for GST on any taxable supplies that you make.

Section 9-5 of the GST Act provides you make a taxable supply if:

(a)  you make the supply for consideration; and

(b)  the supply is made in the course or furtherance of an enterprise that you carry on; and

(c)  the supply is connected with the indirect tax zone; and

(d)  you are registered, or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

The issue is whether your supply of the commercial property is a taxable supply.

As discussed above, the sale of the commercial property by you in your capacity as Trustee for Sale is made in the course or furtherance of an enterprise that you carry on in that capacity. Furthermore, the sale will be made for consideration and will be connected to the indirect tax zone (Australia) and, also as discussed above, you in your capacity as Trustee for Sale are required to be registered for GST.

Your supply of the commercial property is not input taxed or GST-free under any provisions of the GST Act.

Therefore, the sale of the commercial property by you in your capacity as Trustee for Sale, will be a taxable supply as defined in section 9-5 of the GST Act and you will be liable for GST in respect of the sale pursuant to section 9-40.

This ruling applies for the following period:

XX XX 20XX to 30 June 20XX

The scheme commences on:

XX XX 20XX

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You are the principal of a law firm under the business name of XX, Solicitor.

As part of your practice as a Legal Practitioner, you accept appointments as a Trustee for Sale, inter alia, the Supreme Court of Queensland, the Family Court of Australia and the Federal Circuit Court of Australia. The assets subject to such appointment are predominantly real property although you have been appointed in relation to other assets and chattels such as cars, trading companies and business.

On XX XX XXXX, you were appointed Trustee for Sale of certain real estate parcels in Family Court proceedings XXXXXX/XXXX. You have provided a copy of the Order with this private ruling application.

The Order details the properties which you were to sell as Trustee for Sale. Upon your appointment as Trustee for Sale, the beneficial ownership in the properties vests in you as Trustee for Sale for the purposes of the sale.

All properties, with the exception of the commercial property, mentioned in the Order have either been sold by banks as mortgagee in possession or are in the process of being sold by banks as mortgagee in possession.

Pursuant to the Order, you were also appointed as trustee of a Self-Managed Super Fund (the Fund). You were appointed as trustee of the Fund for the purposes of completing matters on behalf of the Fund that are set out in the Order including payment of all outstanding debts to the ATO.

You have included with this private ruling application a copy of a Title Search dated XX XX XXXX for the commercial property showing the registered owner to be the trustee of the Fund. You have also included with this private ruling application a copy of a Title Search dated XX XX XXXX showing you to be the registered owner of the commercial property as Trustee for Sale pursuant to the Order.

You have signed an authority with a real estate agent for the sale of the commercial property. You have provided a copy of the draft Contract for Sale (the Contract) for the commercial property with this private ruling application. The Contract provides that the sale price of the commercial property as being GST inclusive.

You anticipate that the Contract will be signed in the week commencing XX XX XXXX. The current draft of the Contract anticipates a thirty day settlement, however this may be extended to a later settlement date.

You have retained XX Lawyers to act for you with respect to the conveyancing and also goods and services tax (GST) advice. You have included with this private ruling application a copy of a preliminary advice provided to you by XX Lawyers on XX XX XXXX in relation to your requirement to register for GST as Trustee for Sale.

When you took possession of the commercial property, it was empty save for some furniture and other paperwork.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999:

Section 9-5

Section 9-20

Section 9-40

Section 23-5

Section 188-10

Section 188-15

Section 188-20

Section 188-25

Section 195-1